New Criminal Offence for Offshore Tax Evasion

The Government is to consult on plans under which HM Revenue and Customs (HMRC) will no longer need to prove that individuals with undeclared income from offshore sources intend to evade tax in order for a criminal conviction to apply.

Concealing Cash and Assets

Those that conceal cash and assets offshore will be liable to the introduction of the new strict liability criminal offence. The Government also intends to consult on options to amend the existing penalty rules for offshore tax evasion offences.

At present, HMRC needs to show that when an individual fails to report offshore income, they intend to evade paying tax. The alteration to the law will mean HMRC just needs to show the income was taxable and was not reported, which will pave the way for it to successfully prosecute “offshore tax evaders”.

Also, the Government will consult on adding to the existing penalty regime deterrent for those who conceal offshore assets. Under present rules, penalties of up to 200% of the tax owed can be levied.

The plans are announced at the same time as the Government publishes an update to its offshore evasion policy, ‘No Safe Havens’, which mentions that HMRC will encourage “whistleblowers” by way of financial rewards if they provide information which helps uncover concealed offshore assets that have evaded tax.

This news comes amidst speculation that HMRC is also about to send out thousands of letters to UK residents with Swiss bank accounts as part of its drive to crack down on offshore tax evasion.

Declare Offshore Income

If you need to declare offshore income, Tax Innovations can help in every aspect of the HMRC disclosure process to ensure that you pay the correct tax and that penalties are limited as far as possible.

As had been expected, the 2018 Spring Statement update did not include any major tax policy announcements; rather it provided a number of consultations that suggest potential legislative changes in the future. Read more about the areas set for exploration here.